T■ Matt McPherson / Columnist
he real estate market in the San Jacinto Valley is on the rise, both in home prices and rent.
On the rental front, a recent report by Axiometrics, a Dallas-based research and analysis company, revealed that average monthly apartment rental prices in Hemet increased from $755 in 2012 to about $975 in 2017. That’s about a 29 percent increase over the last five years. In comparison, the average rent in the Inland Empire area as a whole is about $1,500 per month – about a 6.7 percent rise. Last year at this time rents were averaging $1,400. Rental prices also rose in neighboring Orange and Los Angeles counties.
Hemet equity continues to rise, while San Jacinto experiences a slight hiccup in equity and sales volume. Statewide in February, single family home sales came in at more than 400,000 which is up 4.9 percent from February 2016, but down 4.7 percent from January. The statewide average home price came in at $478,790 up 7.6 percent from February 2016 and down 2.2 percent from January. While inventory pressures and affordability continue to hamper the San Francisco Bay Area, at the regional level, Los Angeles and the Inland Empire have encountered considerable annual sales gains of 3.1 percent and 7.1 percent respectively.
San Jacinto saw a minor decrease in median home values with a drop from $246,198 in February of 2016 to $237,002 this last February — a decline of 2 percent — which can be attributed to numerous factors that occur during the typically down winter markets.
Hemet, on the other hand, continues to catch the eyes of home buyers and investors alike with its consistent rise over the past couple of years. Hemet experienced a rise of 19 percent in median home values up from $181,696 in February of 2016 to $217,078 this last month.
Another indicator of the market upswing is the volume of properties sold in our two cities. Both cities saw a decrease in volume of sales – San Jacinto dropped from 53 in February of 2016 to only 44 sales last month, while Hemet experienced a similar drop from 153 to 144. The rise in equity and volume of total sales persists, making the valley as a whole a very strong market for sellers and buyers alike.
Across California, the number of sales of existing detached homes has remained above the 400,000 mark for the eleventh consecutive month and continues to rise with 400,500 properties closed in February. The February numbers were up 4.9 percent compared with property sales in February of 2016 and down 4.7 percent from the 420,100 mark this last January.
California Association of Realtors (CAR) President Geoff McIntosh says “While it’s encouraging to kick off the year with back-to-back yearly sales increases, moving forward, California’s housing market could lose steam in the long term as the Fed begins to adjust the federal funds rate,” said McIntosh. “In the short term, however, the specter of higher interest rates may push buyers off the fence to purchase a home before mortgage rates move even higher.”
For the second straight month, existing single family detached homes in California fell underneath the $500,000 average price, but home values remained healthy through the winter season. At $478,790 in February, the median home price is down 2.2 percent from $489,680 in January. A general change in values and the types of homes selling can attribute for half the homes selling above the median value and the other half selling below the median.
“Despite a strong sales start for the year, the housing supply shortage in California continues to cast doubt on whether the sales momentum can be carried forward into the spring homebuying season,” explained CAR Senior Vice President and Chief Economist Leslie Appleton-Young. “The number of active listings has been on a downward trend for the past 20 months and has shown no signs of improvement. As we move into spring, we should see a marginal increase in listings, which will be offset by a pickup in sales. The inventory level is not likely to get better in the upcoming months.”
Another key factor and indicator of the rise in demand versus supply is the average amount of time properties sit on the market before selling. The Unsold Inventory Index generated by CAR measured the number of months required to sell the inventory of units on the market at the present sales rate. In February it rose to 4.0 months, which is up from 3.7 months in January. In February of 2016 the index stood at 4.7 months.
With the listing and buying season arriving in the coming weeks, potential sellers should consider all of these factors and choose a local real estate agent knowledgeable in their area and demographic. This summer should experience a huge volume of sales and rises in equity throughout the valley with demand driving up prices, while the Fed rate adjusts itself, subsequently affecting percentage rates.
T■ Matt McPherson / Columnist